Did you know that before 1973 it was illegal in the US to profit off of health care. The Health Maintenance Organization Act of 1973 passed by Nixon changed everything.

Is the health insurance business a racket? Yes, literally. And this is why the shameless pandering to robber baron corporations posing as “health providers” is such an egregious … and obvious … tactic to do nothing more than plump up insurance company profits.

And do you know who’s to blame?   Believe it or not, the downfall of the American health insurance system falls squarely on the shoulders of former President Richard M. Nixon.

In 1973, Nixon did a personal favor for his friend and campaign financier, Edgar Kaiser, then president and chairman of Kaiser-Permanente.  Nixon signed into law, the Health Maintenance Organization Act of 1973, in which medical insurance agencies, hospitals, clinics and even doctors, could begin functioning as for-profit business entities instead of the service organizations they were intended to be.  And which insurance company got the first taste of federal subsidies to implement HMOA73 … *gasp* … why, it was Kaiser-Permanente!   What are the odds?  It’s all right here to read for yourself.

And to perfectly cement HMOA73 as the profiteering boondoggle that it actually was, the law Nixon mandated also included clauses that encouraged medical providers to not CURE afflictions, but to PROLONG them by only treating the symptoms. There’s no money to be made in CURING sickness.  But the sky’s the limit when it comes to forcing people to endure repetitive doctor visits, endless (and often useless and redundant) tests, and … of course … let’s not forget the ever-increasing demand for American-made prescription drugs!

Have you noticed recently that the words “prolonged coma” and DEATH have wormed their way into the fast-spoken side-effects list of just about every new drug you see on television or hear on the radio?  Death!  From the medicine that’s supposed to cure you!  You know what?  I’ll take restless legs over DEATH.

So it’s an arms race between insurers, who deploy software and manpower trying to find claims they can reject, and doctors and hospitals, who deploy their own forces in an effort to outsmart or challenge the insurers. And the cost of this arms race ends up being borne by the public, in the form of higher health care prices and higher insurance premiums. Of course, rejecting claims is a clumsy way to deny coverage. The best way for an insurer to avoid paying medical bills is to avoid selling insurance to people who really need it. An insurance company can accomplish this in two ways, through marketing that targets the healthy, and through underwriting: Rejecting the sick or charging them higher premiums.  See the pattern?


Another sweet sweet moment in history.



Greed has NEVER played a part in it. Oh, wait…




I’m certain it was a completely necessary to raise prices on a 65 year old drug, suddenly, by over 1000%.


h/t  TwoDimesMove


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  • danielistical

    HOW can INSURANCE companies post RECORD PROFIT year after year AND STILL RAISE their rate to the consumers?…When Martin Shkreli, the 32-year-old CEO who raised the price of the AIDS drug from $13 per pill to over $700 per pill CONGRESS could not and would not do a single thing about it except for calling him in and questioning him about it……WE NEED LEGISLATION ON THE BOOKS or you may talk about it forever and we know the REPUBLICAN party has no intentions of stopping any wall street GREED…….

    • alguien

      let’s not forget, too, that most of these drugs for which the pharmaceuticals are reaming us, were paid for by us as well. most drugs on the market were developed using government funding (ie paid it was paid for by folks like you & me) and, in recognition for our generous contributions, we get to contribute even more!

    • Jack Maher

      Get a job

      • Patrick

        Get a clue

  • Anastasia Beavenhouser


  • Don Buska

    According to Wikipedia “The principal sponsor of the federal HMO Act was Sen. Edward M. Kennedy (MA).” So it seems it was supported by both major political parties at the time.

    • Cygnifier

      Don, because of your post, I set out to investigate this. Ted Kennedy had a reputation for long standing for affordable health care, in part because of health issues of one of his sons and his realization that while he, as a Kennedy, could afford expensive health care that less well-off people could not and that that was not acceptable. Everything in the text and analyses of the legislation creating feasibility trials for HMOs is in keeping with his philosophy. Danged if I can see in the legislation where the health care turned to profit idea exists.

      • thatpageguy

        I think this article is in error. I read in a book by David Cay Johnson that said it was Reagan who promoted for profit. Kaiser to this day is non-profit. Also, Nixon proposed a national health care bill that was better than Obamacare because it was more comprehensive.

  • Bob Lindstrom

    And thanks to for profit enterprises we have some of the best health care in the world (that is if you do not need obabmacare). This for profit has allowed Doctor’s offices to install and use the latest gadgets from simple xray machines to all sorts of machines to detect all sorts of things. Many Doctor’s offices now do what you had to go to a hospital in previous times. Profit is not a bad thing. It allows insurers to take more pool risks as well and this help millions of folks. Don’t subscribe to being a Social Democrat (where the gov’t taxes those that have to give to those that have not).

    • Marvin

      Perhaps the term here should be profiteering. Graduate schools funded by, yes, taxes could do the job and not be hampered by the profit motive. In that case we’d likely have cures, or at least treatments, for some of the rare diseases the pharma people have ignored because there’d be no profit in it. The very idea that some of the richest people in our USA do nothing of value, but still profit from the misery of others should bring you pause.

    • alguien

      you’re assuming that the insurance company will allow you to have the work done at your primary care physician’s office

    • Patrick

      Bob, Bob, Bob! Why are you defending the very people raping your wallet and dignity?

    • Patrick

      And we have the most expensive healthcare in the world too, and the wealthiest CEOS on the planet, There are MANY developed countries with healthcare just as good, and often better. Profit is not a bad thing. Greed and abuse is, and that’s what is going on. But I don’t expect anyone like you who slips in a bash at the ACA or who spits out phrases like “Social Democrat” as if that were an insult, without an iota of knowledge of what you’re angry about to grasp that simple concept. God Bless.

    • Theresa Dodd

      We do not have any of the best healthcare in the world. In terms of cardiac care, OB care, infant mortality and dialysis, to name just a few, we are no where near the top in terms of quality. Where we do shine though, is in dollars spent…and we are not getting our money’s worth. Where are all those health care dollars going? I think they are enriching those who own the insurance companies. BTW, Kaiser is non-profit.

  • alguien

    interesting how, despite the fact that kaiser is responsible for this whole mess we’ve found ourselves in, if you’re in the kaiser system, you will note how much it runs like a single payer health system would run

  • Cygnifier

    After reading the Wiki article, the statement issued by Nixon, a 1975 Rand Corporation analysis of the HMO act of 1973 which details each section of the act, the text itself (located in the tiny pdf link in the text box to the right of the Wiki article), and several other in depth analyses, I’m not seeing is any evidence that there were clauses in the act that would say it was okay to profit from providing HMOs — the feasibility trials were to come up with plans that were economically viable, but that isn’t the same thing as defining health care as a profit-based system. By all indications it was designed as a forerunner of a national health care plan and aimed at controlling the cost of health care for individuals and families by focusing on preventative care rather than just curative care. It also seems to have been aimed at controlling costs through economies of scale (compared with independent practitioners). It provided for federal funding to help groups set up trial HMOs, with priority given to creating HMOs in parts of the country with insufficient access to medical care (and where subsidies would be available for the poor). There is some discussion on p. 12 of the Rand Corp report about the relative impact of efficieny (profit-maximizing) vs. quality-maximizing but the larger focus on price has to do with making sure the HMOs are affordable compared with employer insurance that it is designed to be an alternative to. Some discussion of high risk populations is included, but it does point out that HMOs would not be able to disenroll based on health status or because someone is in a high risk category. States with Medicare and Medicaid support seemed to provide the best options for affordable health care (as with the ACA). So I’m back to being baffled as to why this legislation could be read as being the start of for-profit health care. As Don Buska notes in another comment, Ted Kennedy was the leading sponsor of the bill and reading it, that makes perfectly good sense as it is clearly aimed to increasing access to affordable health care.

  • Estella Cohen

    Schools or health care the GOP is all about making easy money!!